Transcript:
Tom Vaughan:
Hello, everybody, welcome to Tuesday. It’s a green shirt day actually. And it’s very rare to have a red shirt followed by a green shirt. Matter of fact, since I started recording these on the 22nd of March of last year, we only had that happen once, and that wasn’t in the same week: One Friday, and then a Monday. So it’s really kind of amazing; it’s not a super common occurrence. Generally speaking, when you see some downturn, you’ll see continued downturn for a little while. But the market has been falling since last Thursday, through yesterday: Down about 3% on the S&P 500, and apparently that was enough to kind of create some of this buying.
And this is one of my kind of pet theories that I talked about all the time: In order to sometimes get to these new levels, you need to kind of come down a bit and create some kind of momentum, and bargain shopping that comes into the market and pushes it up as far as that goes. But today was a pretty phenomenal day with a lot of really, really powerful motion, on the upside. We saw the small cap Russell 2000 index make almost 3%, which is really been lagging behind the bigger indexes for a while now, so a big shift of money coming in. We’ve had quite a few of these littler dips so far this year. And so we’re seeing a group that’s coming in, and it kind of shows that there’s some cash on the sidelines, once we start to see some of these downturns, you see these come in.
And again, I think it’s going to be very, very difficult to see something of a significant downturn effect here, just because there is money on the sidelines, and it’s not earning much, right? If you’re in a money market, or some of those different types of things, the rates aren’t that high, the banking rates aren’t that high. Bonds are getting to be a little bit more higher on the yield, but even that’s come down some recently. There’s not a lot of other places to really invest. Real estate is a good place, and so that’s some place that I think we’ll see money go, and we certainly see real estate prices doing well. And those are the two areas traditionally that do quite well.
We’re not seeing tremendous gains outside of the US, in terms of kind of the International investments that we have available to take a look at. Once in a while they have some little runs, but really, a lot of that is happening here. So there might even be money coming the other direction, coming into the US, and coming into the US stock market, to especially get some of these dips. So, you’ve got this pretty big pool: Professional money managers, individuals, potential international participants, that are pushing this market forward, and that’s going to continue with rates being where they are.
The risk is going to be really kind of just twofold: things heat up too high. I know, there’s some talk, even today about the fall being a really hot period of time for the economy here in the US. And so, how does the market respond to that, when it gets really hot? Or, a situation where interest rates by the Fed has been increased too many times, and oftentimes we’ve seen that lead to some downturns. But, we don’t have really either one of those right now. Again, it’s not too hot, and the Fed isn’t moving. So really, it’s a good timeframe for the stock market; I think we’ll continue to see some / eek out some gains here. Very fascinating to see what happens tomorrow to follow up on this big move that we had today. So, look forward to talking to you then. Thank you very much.